The mortgage insurance premium (MIP) deduction for a qualified residence has been extended for year 2021. Mortgage insurance premiums (MIP) are paid by borrowers whose downpayment is less than 20% on a real estate purchase. It compensates the lender for their increased risk due to the small amount of equity of the borrower.
Mortgage insurance premium (MIP) deductions are only useful if a taxpayer's itemized deductions on Schedule A (Form 1040) are greater than their standard deduction based on their filing status. The deduction will be included in the home mortgage interest section of Schedule A (Form 1040), line 8d.
The deduction starts to faze out when a taxpayer's adjusted gross income (AGI) reaches $100,000 ($50,000 for married filing separate taxpayers). The mortgage premium deduction (MIP) is completely fazed out when adjusted gross income (AGI) exceeds $109,000 ($54,500 for married filing separate).
For taxpayers just over the faze out limit there are tax planning strategies to reduce adjusted gross income (AGI) in order to qualify for the mortgage insurance premium (MIP) deduction. Planning should be started now, not 2022 when one starts to prepare a tax return. That will be too late, so get out in front of this ASAP.